Sources have told the Daily Telegraph that just five unarmed locally hired Libyans were placed on duty at the compound on eight-hour shifts under a deal that fell outside the State Department's global security contracting system.

Blue Mountain, the Camarthen firm that won a $387,000 (£241,000) one year contract from the US State Department to protect the compound in May, sent just one British employee, recruited from the celebrity bodyguard circuit, to oversee the work.

The compound was overrun by a mob of Islamic extremists on the morning of September 12 in an apparent planned attack that resulted in the death by asphyxiation of the ambassador, Chris Stevens.

Blue Mountain, which is run by a former member of the SAS, received paper work to operate in Libya last year following the collapse of Col Muammar Gaddafi's regime. It worked on short term contacts to guard an expatriate housing compound and a five-star hotel in Tripoli before landing the prestigious US deal.

Other firms in the security industry expressed surprise that Blue Mountain had won a large, high profile contract from the US government. One industry executive said the level of service Blue Mountain provided did not appear adequate to the risks presented by a lawless city.

"We have visited the consulate in Benghazi a number of times and have an excellent relationship with the Americans. Our assessment was the unarmed Libyan guards were extremely poor calibre," said one security source. "The Libyan Ministry of Interior are generally not happy with Blue Mountain and had them on their close observation/target list."

The New York Times last week reported that major security firms with a track record of guarding US premises elsewhere had made approaches to undertake work in Libya but were rebuffed.

"We went in to make a pitch, and nothing happened," a security firm official told the newspaper.

A five man security team from the US diplomatic protection service and three members of a local revolutionary brigade were also on duty on the night of the attacks.

But Blue Mountain's local woes appears to have hampered a coordinated response by the compound's defenders when the late assault kicked off.

Darryl Davies, the manager of the Benghazi contract for Blue Mountain, flew out of the city hours before the attack was launched. The Daily Telegraph has learned that relations between the firm and its Libyan partner had broken down, leading to the withdrawal of Mr Davies.

Abdulaziz Majbiri, a Blue Mountain guard at the compound, told the Daily Telegraph that they were effectively abandoned and incapable of defending themselves on the night of the attack.

"We were in uniform, unarmed except for taser guns and handcuffs, and had been told in the case of attack to muster by the swimming pool," he said. "I was separated from the others and couldn't get anywhere near the swimming pool before I was shot."

US congressional investigators have told the Daily Telegraph that consular staff had reported Blue Mountain guards to the Libyan police on one occasion last year. The diplomats believed that two disgruntled Blue Mountain employees were behind a minor pipe bomb attack on the facility.

However after questioning no action was taken by the police or company over the incident.

Nigel Thomas, the Blue Mountain director, refused to answer any questions about the companies activities in Libya, citing official US inquiries into the incident. He said: "The US State Department investigation is still ongoing at this time. Blue Mountain have no comment to make and all questions should be directed to the US mission."